Foster Wheeler AG (NASDAQ:FWLT) investors should be aware of a decrease in hedge fund sentiment lately.
To most shareholders, hedge funds are viewed as worthless, old financial vehicles of years past. While there are over 8000 funds with their doors open at present, we hone in on the upper echelon of this club, close to 450 funds. It is estimated that this group oversees the majority of all hedge funds’ total capital, and by tracking their best investments, we have deciphered a few investment strategies that have historically outpaced the market. Our small-cap hedge fund strategy outstripped the S&P 500 index by 18 percentage points annually for a decade in our back tests, and since we’ve began to sharing our picks with our subscribers at the end of August 2012, we have topped the S&P 500 index by 25 percentage points in 6.5 month (see the details here).
Equally as beneficial, optimistic insider trading sentiment is a second way to parse down the financial markets. Obviously, there are a number of motivations for an insider to cut shares of his or her company, but just one, very clear reason why they would initiate a purchase. Various academic studies have demonstrated the valuable potential of this strategy if shareholders understand what to do (learn more here).
With all of this in mind, let’s take a look at the key action regarding Foster Wheeler AG (NASDAQ:FWLT).
How have hedgies been trading Foster Wheeler AG (NASDAQ:FWLT)?
At year’s end, a total of 23 of the hedge funds we track were bullish in this stock, a change of -18% from the previous quarter. With hedge funds’ positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were increasing their holdings significantly.
Of the funds we track, Kerr Neilson’s Platinum Asset Management had the most valuable position in Foster Wheeler AG (NASDAQ:FWLT), worth close to $227 million, accounting for 5.1% of its total 13F portfolio. The second largest stake is held by SAC Capital Advisors, managed by Steven Cohen, which held a $92 million position; 0% of its 13F portfolio is allocated to the company. Other hedgies that hold long positions include Ken Griffin’s Citadel Investment Group, Dan Loeb’s Third Point and Robert Pitts’s Steadfast Capital Management.
Because Foster Wheeler AG (NASDAQ:FWLT) has witnessed declining sentiment from the aggregate hedge fund industry, it’s safe to say that there is a sect of hedge funds that elected to cut their full holdings in Q4. It’s worth mentioning that Cliff Asness’s AQR Capital Management cut the largest stake of the 450+ funds we monitor, comprising an estimated $8 million in stock., and Malcolm Fairbairn of Ascend Capital was right behind this move, as the fund dropped about $7 million worth. These transactions are important to note, as aggregate hedge fund interest was cut by 5 funds in Q4.
How are insiders trading Foster Wheeler AG (NASDAQ:FWLT)?
Insider purchases made by high-level executives is most useful when the company in focus has experienced transactions within the past six months. Over the last half-year time frame, Foster Wheeler AG (NASDAQ:FWLT) has seen 1 unique insiders buying, and 12 insider sales (see the details of insider trades here).
With the returns demonstrated by Insider Monkey’s time-tested strategies, retail investors must always monitor hedge fund and insider trading sentiment, and Foster Wheeler AG (NASDAQ:FWLT) is no exception.
Insider Monkey’s small-cap strategy returned 29.2% between September 2012 and February 2013 versus 8.7% for the S&P 500 index. Try it now by clicking the link above.